5 ms·

"be the market" is the advice that comes out of portfolio theory. To say that it applies to one type of investor but not to venture investors is to basically an

"be the market" is the advice that comes out of portfolio theory. To say that it applies to one type of investor but not to venture investors is to basically announce that you have absolutely no understanding of portfolio theory.

Punoxysm 12y ago
VCs deal in illiquid, information-asymmetric markets where prices are directly negotiated, capital is locked up for an extended period, and deals are large enough that investment is forced to be "lumpy". If you could somehow invest in a startup "index", it would be great, but there really is no such thing (especially not for the VCs).
- etjossem 12y ago
  If you read section #1 in the article, you'll note that there are a lot of bad picks out there. To review: - 4,000 startups a year. - 3,000 seen by a16z. - 200 are "fundable." - 15 of those generate 95% of returns. If a single VC firm were to fund all 4,000 startups (or even a representative sample of them), they'd be out of business in a few years. A "startup index" unbiased by due diligence is a pretty bad idea from an investor perspective. That said, if you want an example of a seed fund with a pretty broad approach, take a look at the aptly-named 500 Startups.
  - cklaus 12y ago
    How has the 500 Startup Fund done?
hglaser 12y ago
This is an odd comment. Do you think that Marc Andreessen, who manages one of the most successful portfolios of startups in the history of startups, has "absolutely no understanding of portfolio theory"? Or do you think an alternate explanation might be more likely? Is it possible that you misunderstood something? Or is it possible that, if Marc is challenging this thesis of portfolio theory, he might be doing so from a place of great experience and be worth listening to?
- lazyjones 12y ago
  > Marc Andreessen, who manages one of the most successful portfolios of startups in the history of startups, has "absolutely no understanding of portfolio theory"? He doesn't need to be above average there. Just like PG, he (mostly) invests in technology he actually comprehends, unlike some other delusionary VC from the investment banking world.

Punoxysm 12y ago

VCs deal in illiquid, information-asymmetric markets where prices are directly negotiated, capital is locked up for an extended period, and deals are large enough that investment is forced to be "lumpy". If you could somehow invest in a startup "index", it would be great, but there really is no such thing (especially not for the VCs).

etjossem 12y ago
If you read section #1 in the article, you'll note that there are a lot of bad picks out there. To review: - 4,000 startups a year. - 3,000 seen by a16z. - 200 are "fundable." - 15 of those generate 95% of returns. If a single VC firm were to fund all 4,000 startups (or even a representative sample of them), they'd be out of business in a few years. A "startup index" unbiased by due diligence is a pretty bad idea from an investor perspective. That said, if you want an example of a seed fund with a pretty broad approach, take a look at the aptly-named 500 Startups.
- cklaus 12y ago
  How has the 500 Startup Fund done?

hglaser 12y ago

This is an odd comment. Do you think that Marc Andreessen, who manages one of the most successful portfolios of startups in the history of startups, has "absolutely no understanding of portfolio theory"? Or do you think an alternate explanation might be more likely? Is it possible that you misunderstood something? Or is it possible that, if Marc is challenging this thesis of portfolio theory, he might be doing so from a place of great experience and be worth listening to?

lazyjones 12y ago
> Marc Andreessen, who manages one of the most successful portfolios of startups in the history of startups, has "absolutely no understanding of portfolio theory"? He doesn't need to be above average there. Just like PG, he (mostly) invests in technology he actually comprehends, unlike some other delusionary VC from the investment banking world.